Mexico Gets Imf Loan

April 12, 1989|The New York Times

WASHINGTON -- Mexico has reached a tentative agreement to borrow $3.6 billion from the International Monetary Fund to help it end years of a debt- imposed squeeze on wages and growth, Treasury and other officials said on Tuesday.

Mexico thus becomes the first of the big debtor countries to profit from a sharp change in U.S. debt policy. Because of Mexico`s close ties to the United States, its participation was of particular symbolic importance to Washington.

The change in U.S., proposed last month by Treasury Secretary Nicholas Brady and endorsed by world economic leaders, is meant to lead to substantial reductions in the debts of poorer countries and their interest payments.

At the same time, it encourages new lending by commercial banks, for countries to invest in building up their economies.

The IMF arrangement to help Mexico, sagging under more than $100 billion in foreign debt, was expected to be presented to the IMF`s executive board late Tuesday.

The board could take two to three weeks to approve the three-year loan. Given the current political tension in debtor nations, rejection is improbable.

William Rhodes, a group executive at Citibank and head of the 13-bank committee that negotiates loans to Mexico, said the agreement would permit the banks to start talks on a loan of their own to Mexico, probably on April 19.

The stock prices of U.S. banks that are big lenders to the Third World have climbed since Brady announced his debt strategy.